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Cyprus Sets Benchmark With Lowest Inflation In The European Union

European Inflation Landscape

Recent data from Eurostat reveal a notable divergence in inflation trends across the European Union. In May 2025, the eurozone reported an annual inflation rate of 1.9 percent—a decline from 2.2 percent in April and a reduction from 2.6 percent a year earlier. At the EU level, inflation eased to 2.2 percent in May 2025 compared to 2.4 percent in April, building on a steady previous rate of 2.7 percent.

Cyprus Outperforms Its Peers

Among all member states, Cyprus distinguished itself by recording the lowest inflation rate at just 0.4 percent, a significant drop from 1.4 percent in April and 3 percent in May 2024. This achievement positions Cyprus alongside France and Ireland, which reported annual rates of 0.6 percent and 1.4 percent, respectively, effectively outpacing many of its EU counterparts. In contrast, countries such as Romania, Estonia, and Hungary experienced the highest inflation rates at 5.4, 4.6, and 4.5 percent, respectively.

Sectoral Contributions To Price Movements

Within the eurozone, the services sector played a dominant role by contributing 1.47 percentage points to the annual inflation rate, underscoring its significant weight in the overall economic landscape. Other factors included increases in the cost metrics for food, alcohol, and tobacco, which added 0.62 percentage points, and non-energy industrial goods, which contributed an additional 0.16 percentage points. Notably, energy costs had a deflationary effect, reducing the annual inflation rate by 0.34 percentage points.

Implications And Forward Outlook

The varied inflationary pressures reflect the complex economic dynamics at play across Europe. With fourteen member states reporting declines in annual inflation compared to April 2025, one state maintaining steady levels, and twelve experiencing increases, policymakers face the challenge of tailoring responses to disparate national conditions. Cyprus’ performance, however, signals potential resilience and effective economic management in controlling inflationary pressures as the continent navigates a shifting global economic environment.

AI Adoption Makes Employee Performance Harder To Assess, Survey Finds

Companies have rapidly adopted AI tools to improve productivity, but the technology is creating new challenges for managers, who say it is becoming harder to evaluate work, supervise teams and maintain control.

More than half of senior leaders surveyed said assessing employee performance had become more difficult since their organisations adopted AI, according to a Nielsen survey of 1,700 directors and senior managers across seven countries, commissioned by work-management software company Monday.com.

AI Makes Performance Harder To Measure

AI allows employees to produce polished work more quickly, making it harder for managers to distinguish between human effort and machine-generated output. Nearly half of respondents said they now spend more time reviewing and guiding their teams’ work.

Despite these challenges, enthusiasm remains high: 94% said they were excited about using AI to improve work.

Michal Miller Levi, head of market research and customer insights at Monday.com, said organisations were struggling to adapt their processes at the same pace as the technology.

“AI works very well for [managers] individually, but they also have a different role as managers. They need to drive the organization as well […] Their struggle is [due to] the fact that AI is just moving faster than the organizational processes,” she told TechCrunch.

Performance Reviews And AI Bias

AI is also changing how employee performance is evaluated. According to the survey, 78% of respondents had changed their performance criteria since adopting AI, placing greater emphasis on prompt-writing, deciding which tasks to delegate to AI and experimenting with new working methods.

At the same time, AI is increasingly involved in the evaluation process itself. Some 46% of managers said they use AI to inform decisions, while 39% use it to draft performance reviews.

This raises concerns about fairness and algorithmic bias. Research from the Luxembourg Institute of Socio-Economic Research found that, without clear objective standards, large language models tend to rate performance in ways that mirror human evaluators. A separate paper published in early 2025 found that AI models could exhibit biases against Black male candidates, with differences across social groups.

Levi said companies had yet to establish the right frameworks for managing these risks.

AI Adds To Managers’ Workloads

Managers are increasingly responsible for assigning tasks to AI agents, reviewing their output and intervening when systems make mistakes. This creates an additional layer of oversight, or “invisible labour”, on top of their existing responsibilities.

The software environment is also becoming more complex. Some 57% of managers said their organisations now use more tools than before AI adoption, while 51% reported greater interdependence between those tools. Only 29% described their AI infrastructure as fully optimised and centralised.

Rather than consolidating software, many companies are dealing with more applications, integrations and unauthorised AI tools used outside approved systems.

Governance Becomes The Next AI Challenge

The survey suggests that oversight will become even more important as businesses deploy increasingly autonomous AI agents. Some 58% of managers expect to oversee more AI agents than human employees within the next year, while 46% are concerned about losing control over their agents’ actions. Another 35% worry about being held responsible for decisions made by AI.

Levi said managers wanted human involvement in critical tasks and decisions, with AI supporting rather than replacing human judgement.

The findings point to a broader challenge for businesses: boosting productivity is only part of successful AI adoption. Companies also need clear processes, reliable infrastructure and accountability frameworks to ensure that faster output does not come at the expense of effective management.

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